Does mySAP ERP Render SAP R/3 Enterprise Obsolete? And If Not, How Does an SAP R/3 Customer Pick the Right Upgrade Path?

Q: What are the differences between SAP R/3, SAP R/3 Enterprise, and mySAP ERP?

Let's use SAP R/3 as a baseline, since readers of SAP Insider are all familiar with this incarnation of SAP's ERP software. Many customers are using SAP R/3 software to run their financials and human resource requirements. Perhaps many are using SAP R/3 to gain operational efficiencies as well, in the areas of sales, distribution, or
production planning. This core functionality is called
enterprise resource planning, or ERP.

As is the case with any SAP software upgrade, we added functionality and enhancements to all areas of our latest SAP R/3 release, SAP R/3 Enterprise. However, the significant improvement in SAP R/3 Enterprise was a new architecture that addressed three major concerns customers had about their ERP solution.

First, customers asked us to help lower total cost of ownership (TCO) by making upgrades easier — this was accomplished by essentially freezing functionality in a stable "core." Second, we were asked to make it easier to deploy new functionality. So, on top of the core, we developed "extension sets" that contain new functionality and can be deployed optionally as needed. Third, we swapped out the long-standing Basis platform on which SAP R/3 software releases run — up to and including SAP R/3 4.6C — and replaced it with a much more open, versatile, and extensible technology base, the SAP Web Application Server.

Moreover, we have seen the role of ERP changing in the enterprise today, and for this reason we created a blueprint for a "next-generation" ERP system called mySAP ERP. On top of standard ERP functionality, we added business analytics and enhanced corporate governance functions to help employees at all levels gain better insight into their business. Fully integrated functionality found in SAP Business Information Warehouse (BW) and SAP Strategic Enterprise Management (SEM) supports this insight.

SAP NetWeaver is the underlying technology stack of mySAP ERP, allowing system landscapes to be adapted to business requirements as needed. This technology will help reduce TCO by allowing incremental upgrades, leveraging existing assets, and integrating third-party applications. The flexibility of SAP NetWeaver also allows organizations to modify and change business processes as needed to suit their ever-changing process landscape. In fact, we have already seen several companies using this technology with great success.

Finally, the integration of a role-based portal and self-service applications helps boost productivity. We have already shown the new functionality coming in mid-2004 to several mySAP ERP customers. Indeed, mySAP ERP is the fastest-growing segment of our business.

mySAP ERP takes classic ERP functionality found in SAP R/3 Enterprise and combines it with additional
collaborative functionality in the areas of human resources, financials, and operations. This new solution is powered by the complete SAP NetWeaver open technology and
application platform.

But mySAP ERP contains a lot more. Additional
functionality has been added for strategic enterprise management, financials supply chain management, travel management, incentive and commission management, and real estate management. On top of this, mySAP ERP includes corporate services, operations functionality, and a number of new self-service applications, such as manager's desktop, HR executive's desktop, and self-service procurement. These additional self-services are built using a new usability concept that will be rolled out in future releases of mySAP ERP.

Q. Is licensing set up so that it is cost-effective for customers to adopt mySAP ERP if they only want to use portions of the offering — for instance, when a customer does not plan to use HR capabilities? Wouldn't it be better to then license these things à la carte?

The pricing model for mySAP ERP is the same as for mySAP Business Suite. SAP R/3 customers that want to use all the benefits of mySAP ERP simply convert their existing contracts. However, SAP does consider the needs of customers that only want specific functionality. It is possible for users to license additional functionality such as supply chain management, customer relationship management, or e-learning.

Q: Is SAP R/3 Enterprise going away?

SAP will support SAP R/3 Enterprise until at least 2009. It is important to remember, however, that SAP R/3 Enterprise is not based on the full SAP NetWeaver integration and application platform, but only uses SAP Web Application Server. SAP is committed to SAP NetWeaver as its strategic technology platform, and only products that fully support SAP NetWeaver will be developed further.

Q: What advice can you offer customers before they start a cost vs. benefit exercise to decide upon the best upgrade path?

I would say that customers must look carefully at the additional value mySAP ERP provides them in the areas of insight, adaptability, flexibility, and productivity — and then make an informed decision based on their own specific requirements. When preparing a business case, my advice is to analyze benefits along these four essential axes.

As digital technologies have expanded their reach, the task of ensuring secure authentication and identity management within business processes has become more complex. Employees are no longer the only users...